China has assumed an increasingly prominent role in the Asian trade. Discuss what it implies for India. (200 words)
Refer – Live mint
Enrich the answer from other sources, if the question demands.
IAS Parliament 6 years
KEY POINTS
· China has served as the key node in Asian Global Value Chains (GVC) as a centre of processing and assembling intermediate inputs for re-exporting to the world market.
· It played a major role in ensuring that manufactured exports from Asia have remained cost-competitive globally.
· Measured by value, intra-regional trade flows in Asia have risen in importance over the past two to three decades.
· On average, the share of intra-regional trade in total Asian trade in goods has risen, comparable to that of the European Union (EU).
· Meanwhile, Asia’s share of world exports has also risen.
· Nonetheless, much of this increase was due to China’s emergence as an export powerhouse and a key player in both intra-regional and extra-regional trade.
· Excluding China’s exports as well as intra-regional export flows to China, Asia constituted only about one-fifth of total world exports throughout the 1990-2017 period.
· A similar pattern can be observed for imports.
· As a result, China’s trade performance has had a major impact on Asia’s intra-regional and extra-regional trade as a whole.
Implications for India
· Unlike China, India has not been able to fit prominently into the Asian GVCs.
· The Regional Comprehensive Economic Partnership (RCEP) was expected to be the catalyst for this to happen.
· However, there is a growing belief in policy circles in India that such trade agreements have been the cause of limited success of the much-touted “Make in India” scheme as well as the ongoing “job crisis”.
· However, the trade agreements per se ought not to be used as a scapegoat for India’s manufacturing and employment slump.
· India’s anaemic manufacturing performance and inability of India to plug effectively into regional global supply chains is the sustained supply-side distortions and rigidities as well as relatively high trade costs in India.
· Indian manufacturers consequently have found it hard to benefit from the trade liberalization efforts and instead have been faced with large-scale imports of cheaper goods.
· India should focus on leapfrogging and getting prepared to deal with the rising influence of China in Asian trade.
